Local News

City of Fort Morgan has plan for paying for NISP, Jeff Wells says

City's portion of water storage/supply project: $40M to $50M

ByJENNI GRUBBS Times Staff Writer

Posted:
05/14/2013 10:57:47 AM MDT

ort Morgan City Manager Jeff Wells goes over the plan for paying for the city's share of the cost of building the Northern Integrated Supply Project (NISP) in coming years at the Fort Morgan City Council meeting May 7, 2013, at Quail Dunes at Fort Morgan Golf Course. Wells told the council that it all came down to the timing of when the project would be built, but he thought current scheduling would work out for the city. Also pictured is City Treasurer Jeanne Kinney. (Jenni Grubbs/Fort Morgan Times)

Fort Morgan should be able to afford paying for a chunk of a proposed large water storage and distribution project, Fort Morgan City Manager Jeff Wells told the Fort Morgan City Council at the May 7 regular meeting at Quail Dunes at Fort Morgan golf course.

The city of Fort Morgan is one of 15 participants in efforts thus far to build the Northern Integrated Supply Project, or NISP.

"The NISP is probably the most critical project the city has dedicated time and money to since C-BT," Wells said.

The question on the council members' minds, though, was could the city continue to afford it.

"NISP is affordable if we stay on the current schedule," Wells said, saying that the city had a plan to make it work.

Right now, that schedule, which easily could change, plans for construction to start in 2019.

The overall project is an ambitious one.

It would involve building two reservoirs, called Glade and Galeton, two pump plants, more pipelines and work to improve an existing canal to divert water off the Cache La Poudre River, according to the Northern Colorado Water Conservancy District.

It would supply 40,000 acre feet of water supplies and storage to participants.

Glade Reservoir would be built north of Fort Collins' Horsetooth Reservoir and also would require relocating seven miles of U.S. Highway 287.

The smaller Galeton Reservoir would be built north of Greeley and east of Ault along Colorado Highway 14.

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It would be the primary source of Fort Morgan's NISP water storage, with water still supplied through the C-BT pipeline.

The overall cost of building this project is expected to be $400 million to $500 million, and because Fort Morgan has a 10 percent share in the water storage at NISP, the city would be responsible for 10 percent of that cost.

Other NISP participants, each with a different sized portion of the project and its costs, include: Central Weld County Water District, Dacono, Eaton, Erie, Evans, Firestone, Fort Collins-Loveland Water District, Fort Lupton, Frederick, Lafayette, Left Hand Water District, Morgan County Quality Water District, Windsor and Severance.

But Fort Morgan's $40 million to $50 million is the money the city would need to pay for the project's construction, which likely is still several years from starting -- and that's if everything falls into place and the project gets permitted.

In the meantime, in order to stay a part of the project, the city has to keep putting lots of money toward everything leading up to the decision on the permitting, including legal and engineering work, environmental and other studies and anything else that comes up.

"In 2002, we started the NISP permitting process," Wells said. "The 15 municipalities and organizations involved spend about $1 million a year" on this process, and Fort Morgan has spent more than $1 by itself since the process began.

That process is being handled through the Northern Colorado Water Conservancy District, which also manages the Southern Water Supply Pipeline that supplies Colorado-Big Thompson water to the city.

"It's actually been to our advantage that it hasn't been permitted yet," Wells said. "If we can save up the first $4 million by when NISP gets permitted, we save about $1.1 million over the life of the bonds."

Paying for NISP

Currently, the city about $1.2 million in the fund reserved for NISP. That money was generated from the monthly NISP surcharge on city water customers' bills.

"With our NISP surcharge, the idea is to put as much into reserves as possible and save up the money," he said.

Part of the plan for being able to afford NISP, Wells said, has been paying off other water debt where possible, including one C-BT project note that was paid off in 2012 and saved more than $30,000 in interest payments. That money then was put in reserves.

Wells said that the city had spent a total of $38.8 million on building the C-BT pipeline project.

Another thing that has helped toward NISP affordability has been that another note that will end in 2019 was refinanced with a lower interest rate that will mean a savings of $400,000, he said.

And partnerships was something else Wells said could help out with financing NISP.

Quality Water already partners with the city on the C-BT pipeline, which would be how water from NISP would come to the city.

Wells said the city would continue to "look at other partners within the county" that may want to share in the costs and then reap part of the benefit.

"The first step is to make sure we have enough cash on hand" at the time of permitting," he said.

Earlier plans had called for the city to need to have $7 to $8 million dollars available as soon as 2016 for this in each of the first two years of building the project, but that schedule has been pushed back.

"If it happens in 2019, that works for us," Wells said.

The reason 2019 is desirable for the city for NISP construction's start is that the city's $1.1 million C-BT debt would be retiring, so potentially the same size debt for NISP could take over.

And any cash the city could save up to contribute to the project would cut down on debt that needed to be taken on.

Wells said that the projected direct cost increase to city residents once NISP construction gets close to starting likely would be about $11 per month added on to the base water rate at that time.

This would cover the cost of annual debt service for bonds and reserve requirements, as wells ongoing maintenance costs once it's built.

However, before the city could take out any such bonds, residents would have to vote in favor of taking on the debt.

Meeting needs

Councilman Joe Segura Jr. asked Wells what would happen if other NISP participants dropped out before the permitting process was completed or construction began.

Wells said that had already happened, but it hadn't affected Fort Morgan.

"Our share of the cost hasn't gone up," he said. "Other cities have gobbled up shares that opened up."

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